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Looking Behind Pinterest's Aggressive Ad Strategy

By Joy Baer April 10, 2014 | 12:18pm

Advertising Age reported last week that Pinterest is seeking commitments from advertisers of $1 million to $2 million (“Got $1 Million? Pinterest Would Like to Sell You an Ad,” March 20). This is a bold strategy, especially considering that the company is hoping to fetch a CPM range between $30-$40, according the article.

While Pinterest is aiming high, I like it.  There are certain moves they can make that will allow them to command such a high CPM. It will be a challenge to get there, but it’s possible. They already look to be on the right track.

Pinterest already started testing some advertising late in 2013, and it seems that a big user concern is being inundated with potentially less relevant pins.  This was a user comment on Ben Silbermann’s blog:

I am all for you guys monetizing your investment in Pinterest via advertising, but not at the expense of the user experience you have created. You are risking alienating your client base by ruining the experience they have come to love. I know i have already stopped accessing Pinterest via a browser because of the “we though” pins making it cluttered, how many other people will stop using completely if these posts continue to be so prevalent and then migrate to mobile platforms???

It appears that in reaction to their ad testing in 2013, now Pinterest is employing a “High, High, Low” approach to advertising; high quality, high-engagement, low-volume. By ensuring that the ads appearing on the site appeal directly to its users, Pinterest will have a strong appeal to advertisers – and most importantly, won’t dilute the Pinterest experience!

Pinterest is certainly in the market position to employ a highly engaging strategy.  Considering the type of activities I perform on Pinterest, they know EXACTLY what I am HIGHLY interested in and could be targeting very specialized ads my way.

I think Twitter’s first approach to advertising last year could have been selling their position short. I am performing much broader life activities on Twitter and Facebook (games, human interest news, hashtags, catching up), so advertising is potentially less engaging.  But on Pinterest, think of this:  my New Bathroom Ideas Board and Kohler, my Backyard Furniture and Sunbrella; the meaningful, relevant advertising opportunities are endless – and worth the high CPMs!

A high quality strategy will command those high CPMs - perhaps close to its $30 target.  This approach is critical for any social platform to provide meaningful advertising experience with a focus on engagements. For now, this approach will differentiate Pinterest from other social platforms. They’re learning from what works and didn’t work for other social media platforms and evolving on their own.

Pinterest’s approach will also help answer a key question many advertisers have when it comes to advertising on social platforms: What is the ROI for social advertising? Our most recent STRATA agency survey found strong demand for social media even with this lingering ROI question. 

According to our Q4 survey, Pinterest has gained a lot in popularity with our clients as 35% said they would use the channel, up from just 22% one year ago.  

The demand for advertising on other social platforms remains very strong. More than 87% of agencies polled were interested in using social media in client campaigns, with Facebook remaining the dominant social media channel for advertisers with 81% of respondents indicating they would use Facebook in their clients’ campaigns. Other popular social channels for agencies include YouTube (57%) and Twitter (48%). LinkedIn is also gaining popularity with agencies, as 33% of agencies indicated they would consider using it in clients’ campaigns. This represents an increase of 56% since last year for LinkedIn.

While interest in social media advertising continues to grow at astronomical rates, the value of social media remains in question for advertisers. 54% of respondents said they would buy more social media ad spots if the value was more obvious, and 41% would be more open with a set of changes including an easier process, more obvious effectiveness, lower minimum volumes and less complex targeting.

Pinterest may be able to placate the concerns of ad agencies by implementing this “High, High, Low” approach. A tailored and focused ad experience for their users will resonate strongly with advertisers that have already been willing to spend the money on social despite their questions on ROI. Once advertisers see more direct results from targeted, high quality ad campaigns, the ROI question will dissipate and we may see even more social ad spend. This approach will also allow for a more meaningful experience for Pinterest’s users. This is good news for Pinterest. Its peers should take note. 

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